Under what circumstance will the buyer of a put option be asked to perform his or her obligation?
A)When the stock price has declined below the strike price.
B)When the stock price has increased above the strike price.
C)The put buyer has an equal obligation regardless of the relationship between stock and strike prices.
D)The put buyer has no obligation whatsoever.

Question

Quizplus · Accepted Answer

The buyer of a put option has the right, but not the obligation, to sell the underlying asset at the strike price before the option expires. The choice to exercise this right is entirely up to the buyer, meaning they are never asked to perform an obligation.

Under What Circumstance Will the Buyer of a Put Option